Question

A borrower takes out a 30-year adjustable rate mortgage loan for $200,000 with monthly payments. The first two years of the loan have a “teaser” rate of 4%, after that, the rate can reset with a 5% annual payment cap. On the reset date, the composite rate is 6%. What would the Year 3 monthly payment be? with the way please.

Answer 1

Note : The EMI has been calculated by using PMT formula in Excel.

Loan amount		2,00,000
Interest Rate For first 2 years		4%	Monthly int Rate	0.33%
Time Period (years)	30	Number of Months	360
EMI		₹ 954.83

At the end of seconf year the new rate will be applicable on the remaining principle amount.

Balance Principle at the end of two years		1,92,500.24
Interest Rate		6%
Remainig Time (years)		28
EMI		₹ 1,184.12

Working: Calculation of principle amount at the end of secend year.

Months	Begening	EMI	Interest	Principle	Balance
0	200000.00	954.83	666.67	288.16	199711.84
1	199711.84	954.83	665.71	289.12	199422.71
2	199422.71	954.83	664.74	290.09	199132.62
3	199132.62	954.83	663.78	291.06	198841.57
4	198841.57	954.83	662.81	292.03	198549.54
5	198549.54	954.83	661.83	293.00	198256.54
6	198256.54	954.83	660.86	293.98	197962.57
7	197962.57	954.83	659.88	294.96	197667.61
8	197667.61	954.83	658.89	295.94	197371.67
9	197371.67	954.83	657.91	296.93	197074.75
10	197074.75	954.83	656.92	297.91	196776.83
11	196776.83	954.83	655.92	298.91	196477.93
12	196477.93	954.83	654.93	299.90	196178.02
13	196178.02	954.83	653.93	300.90	195877.12
14	195877.12	954.83	652.92	301.91	195575.21
15	195575.21	954.83	651.92	302.91	195272.30
16	195272.30	954.83	650.91	303.92	194968.38
17	194968.38	954.83	649.89	304.94	194663.44
18	194663.44	954.83	648.88	305.95	194357.49
19	194357.49	954.83	647.86	306.97	194050.52
20	194050.52	954.83	646.84	308.00	193742.52
21	193742.52	954.83	645.81	309.02	193433.50
22	193433.50	954.83	644.78	310.05	193123.45
23	193123.45	954.83	643.74	311.09	192812.36
24	192812.36	954.83	642.71	312.12	192500.24